Money Management Part I: Tracking Your Spending

One of the most stressful parts of traveling is budgeting your money. Usually when I travel, I feel like money is just flying out of my hands left and right which is not a pleasant feeling at all. This stress can usually be mitigated in two ways: 1) by effectively tracking your spending and 2) by spending less. I feel much better when I can account for where my money went and know that it wasn’t wasted. Nothing is worse than finishing a day with an empty wallet and not remembering where it all went.

I’m not going to lie, this is something that I have struggled with consistently when I travel. I someone who uses credit cards 99% of the time at home, I’m used to tracking my spending via online banking. Having to carry and use cash becomes frustrating and overwhelming over long periods of time. Over the course of my trips I’ve found a few strategies which have helped keep tabs on my cash.

1. Plan Ahead
I know I know, my gravestone is going to say “Plan ahead! Make an itinerary!” But that’s okay, because at least it won’t say “add text later…” Booyah. (That was a planning ahead joke…and yes, it was bad.) Anyway, this is not the part where I tell you to make a budget and stick to it. Yes, you should do that – so should I, but it never happens. Budgets are like the high school boyfriend you promised you’d still want to be with when you got to college. Then you get to college and you can’t understand how you though $15 a day would be enough for food. You’re about to go to college, you don’t need that kind of commitment.

So go ahead, dump the boyfriend, call the spade a spade and admit you’re going to be single (this metaphor stopped working about three sentences ago.) What I am saying is, sit down and add up your possible trip expenses and be honest -really honest about your spending plans. Add up the cost of your hotel every night, and the cost of food every day. Now double whatever amount you wrote down for food. Now add in about $50 a day for “incidentals, entertainment, and transportation.” Now add up everything together and for good measure tack on an extra $300.  You should be looking at a pretty large sum of money.

Mentally deduct that amount from your bank account and think about if you will be okay with that when you come back. Imagine that that money is gone – can you still make the rent when you get back? How do you feel about having spent that money? You need to mentally prepare yourself for the fact that you could spend this money on your trip. (If you’re starting to feel a little ill at this point – good, hold onto this feeling. Remember it every time you think you’ll grab just one more beer or take a taxi instead of the train.)

If you can’t afford to spend this money, at this point you need to make some hard choices. Even if you’re the best budget keeper in the entire world, there are always unexpected expenses – sometimes big one. You don’t want a financial cushion of $100. It’s time to start reevaluating your priorities – maybe you can book a cheaper hotel. Maybe you can skip out on a couple days of touring. Adjust your expectations and your plan to better meet your finances.

2. Pay up front
Okay…so this is also a little bit similar to planning head but bear with me. It’s not always possible to pay for things ahead of time, but if there is anything you know you can buy or pay for in advance – go ahead and take care of that. Flights, Train Tickets, Hotels – those are all good things that can be paid for in advance.

Now there are obvious drawbacks of this approach – mainly that you will be committed to these plans. But, one major advantage is that you can go ahead and see this money spent before your trip. It’s much easier to budget and view your expenditures before your trip. Having gotten these big expenses out of the way will allow you to focus on tracking your other spending during the trip. In addition, it means you can carry less cash during your trip. If (heaven forbid) you were robbed during your trip – you would at least have your hotel and flight sorted out.

3. Understand the Exchange Rate
This one is very important if you are traveling internationally. You must know and understand the exchange rate of the local currency.If you don’t under the local currency, you have no chance of effectively managing your money. Once you understand the exchange rate make sure you actually use it when withdrawing money or making purchases. It’s easy to start thinking of the foreign currency as “monopoly money” which will lead you spend way more than you  mean to. As you are purchasing a soda think “If this is 100 yen – that is $1.29. Am I okay spending $1.29 on a soda?” It’s easy to get in the habit of thinking, “100 yen is about $1″ but that could backfire when you are talking about 10,000 yen a night hotel rooms, which you are thinking are $100 but are really $129.

4. Plan your ATM withdraws
Don’t just take out money willy nilly from the ATM machine. It becomes impossible to remember how much you took out and where. It’s better if you get on a planned schedule for withdraws. Take out the same amount each time and make a note of it somewhere. This will really help you notice how much money you are taking out and how much you are spending.

If you are traveling with companions, I find that it’s helpful to pull out money together to create a combined “pool.” If you each take out $100, you will have $200 in the pool and you can pay all expenses from that pool. That way you each contribute the same amount you will each be paying for half. It avoids the awkwardness of splitting checks and you don’t have to keep track of each individual “who owes who” that comes up.

5.  Carry Small Change
In most countries, ATMs give out huge bills that you can never hope of breaking. This makes it hard to stay on a budget because you end up buying a few more things so that people will be able to give you change. Ask someone at your hostel or at a bank to break your big bills for smaller change. Then organize it within your wallet to make it accessible. Carry a few very small bills and some change in a different pouch so it can be fished out easily when buying food or smaller items. This way you will spend only the exact amount and you manage your “petty change” during the day without having to dip into your “larger” (but not that large…don’t carry to much it’s not safe) cash reserves.

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